K-Electric Ltd. · PSX:KEL
K-Electric — H1 FY2014 Earnings Presentation
31 slides from K-Electric's earnings presentation, Jun 26, 2014
Slide 1: Corporate Briefing – HYFY2014 Results
Corporate Briefing – HYFY2014 Results © Copyright 2014 KE. All rights reserved
Slide 2: Forward-looking statements disclaimer
This presentation and discussion conducted today may contain forward looking statements including time lines, strategies and plans going forward. Forward looking statements and the associated impact on the “K- Electric” (Formerly, Karachi Electric Supply Company Limited or the “Company”) are subject
Slide 3: Table of Contents
Table of Contents Executive Summary Business Update
Slide 4: Business Overview
Business Overview Business Overview – Value Chain Incorporated in 1913, K Electric (Formerly: Karachi Generation Transmission Distribution Electric Supply Company) is a publicly listed fully Own Generation integrated power utility (64%) involved in generation, Grid Stations End User transmission a
Slide 5: History – Timeline of Events
History – Timeline of Events Karachi Electric - History 1913 1949 1952 1999 2005 2008 (April) 2009 (May) 2013 (Sep) KESC First Nationalization Instatement of Privatization Abraaj approached by Transaction Close KESC incorporated Company to of KESC Army Existing Shareholders /Legal Completion rebrand
Slide 6: Abraaj Transaction
Abraaj Transaction Karachi Electric - History Abraaj acquired a controlling stake* in KESP, currently the 69.2** shareholder of KESC from a consortium of the Al Jomaih Group (Saudi Arabia) and National Industries Group (Kuwait) through a commitment to inject equity into the Company: ‒ The transact
Slide 7: Key Accomplishments
Key Accomplishments KE now positioned for strong future growth Marked improvement: EBITDA of PKR 26.7 billion (FY 2013) ; HYFY14 EBITDA of PKR14.6 billion Net Income in FY 2012 was positive for the first time in 17 years – last seven consecutive quarters have had a Net Profit Total CAPEX spend
Slide 8: Key Challenges
Key Challenges Significant progress made, but the speed of change is being affected by challenges in both the external and internal environment Challenges Mitigation / Work in Progress High inflation and significant increase in average tariff DSP arrangement to outsource management of high loss
Slide 9: Table of Contents – Generation & Transmission
Table of Contents Executive Summary Business Update 1. Generation & Transmission (G&T) 2. Distribution 3. HR Restructuring 4. Funding & Financial Performance
Slide 10: Generation – Profile
Generation – Profile Total Gross Dependable Capacity of 1,620 MW with nearly 1,000 MW of plants less than five years old 1,260 MW Bin Qasim Power Station 1 (BQPS 1) 220 MW Korangi CCPP Capacity 1,260 MW (6 units) Capacity 220 MW (4 units) GDC (Dec-13) 735 MW (4 units) (1) GDC (Dec-13) 192 MW Year 19
Slide 11: Generation Improvements
Generation Improvements Installed generation capacity has been enhanced by over 1,000 MW and overall efficiency has improved from 30.4% to 37.7% Generation Timeline 220 MW 220 MW 220 MW Aggreko BQPS II BQPS II Projects Already Underway CCPP Aggreko(1) CCPP Aggreko(1) GE JB GE JB CCPP GE JB GE JB dec
Slide 12: Transmission Improvements
Transmission Improvements Increased reliability in transmission network and significant reduction in transmission losses Timeline of New 132 KV Grids Korangi Gulshan-e- PRL Airport II Memon Azizabad Jail Road Hospital DHA 1 Contract signing for Mehmoodabad South Maymar Creek City Goth Grid Agha Khan
Slide 13: Future Initiatives – Generation (1/2)
Future Initiatives – Generation (1/2) Conservation generation assumptions were taken; significant potential for upside with the execution of projects that are in planning stage Key Initiatives ̶ Increased efficiency / capacity from converting two existing fully operational open cycle plants (220 MW
Slide 14: Future Initiatives – Generation (2/2)
Future Initiatives – Generation (2/2) The below mentioned projects are to provide significant upside potential as well – not currently in business plan Pre-feasibility studies completed by Biogas Technology provider-Highmark Renewables, Canada – for approximate 22 MW Plant A separate company, Ka
Slide 15: Table of Contents – Distribution
Table of Contents Executive Summary Business Update 1. Generation & Transmission (G&T) 2. Distribution 3. HR Restructuring 4. Funding & Financial Performance
Slide 16: Distribution – Performance
Distribution – Performance 9.4% reduction in T&D losses since FY 2009; today 69% of the city has distribution losses of c. 16% Key Initiatives Impact State of the art billing and CRM system roll out (SAP ISU) Improved systems: Better overall management and Implementation of Continuation of seg
Slide 17: Distribution – Recovery Ratio
Distribution – Recovery Ratio Recovery remains challenging for KE due to poor collections from Public Sector Enterprises and rising tariffs Commercially Overall Recovery Ratio has been impacted by the weak Public Sector Excluding PSC, 17 out feasible – platform recovery and High Loss areas of 28 I
Slide 18: Future Initiatives - Distribution
Future Initiatives - Distribution T&D losses (Rolling Average) have already reduced from 35.9% in FY09 to 26.5% in HY14, a total of 9.4% Key initiatives to reduce T&D losses and increase recovery include: Smart Grid Initiative: Plans already finalized. A stepping stone for KESC to progress and bec
Slide 19: Table of Contents – HR Restructuring
Table of Contents Executive Summary Business Update 1. Generation & Transmission (G&T) 2. Distribution 3. HR Restructuring 4. Funding & Financial Performance
Slide 20: HR Restructuring
HR Restructuring Enhanced workforce effectiveness through creation of a performance-driven and workforce optimization (reduction of head count by approximately 7,000 to 10,594) Abraaj Initiatives: Rightsizing Accountability Management Change Promotion of 3,500 Non-Management to Implementation of
Slide 21: Table of Contents – Funding & Financial Performance
Table of Contents Executive Summary Business Update 1. Generation & Transmission (G&T) 2. Distribution 3. HR Restructuring 4. Funding & Financial Performance
Slide 22: Financial Highlights
Financial Highlights FY 2012 marked KE’s return to profitability after 17 years Net Income (PKR Billions) EBITDA (PKR Billions) 26.7 Net profitability achieved first time in 17 years 17.4 6.7 13.4 14.6 4.7 2.6 3.2 3.5 FY11 FY12 FY13 HY13 HY14 (restated) FY11 FY12 FY13 HY13 HY14 (restated) -9.4 Contr
Slide 23: Financial Results – HY FY14 Income Statement
Financial Results – HY FY14 Income Statement (PKR Millions) Variance Description HY FY-13 HY FY-14 Inc/(Dec) % Revenue from Sale of Energy 56,334 68,413 21.4 Tariff Adjustment 37,904 27,079 (28.6) Rental of meters and equipment 109 109 0.1 REVENUE 94,346 95,601 1.3 Rate/Unit Billed 16.88 16.38 (3.0)
Slide 24: Financial Results – HY FY14 Balance Sheet
Financial Results – HY FY14 Balance Sheet (PKR Millions) ASSETS Dec 31, 2013 June 30, 2013 EQUITY & SHARE CAPITAL Dec 31, 2013 June 30, 2013 ASSETS EQUITY & SHARE CAPITAL Property, plant and equipment 163,030 164,681 Share Capital & Reserves 103,218 103,153 Intangible assets 396 505 Accumulated loss
Slide 25: Capex and Funding
Capex and Funding Primary objective of increasing generation capacity has been achieved over the last 4 years – Transmission and Distribution Capex has been focused on infrastructure enhancement Capex (USD Million) FY 2009 to date Generation include new projects of 220 MW CCPP, BQPS II – Generatio
Slide 26: K-Electric Sukuk
(Formerly Karachi Electric Supply Company Limited)
Slide 27: Transaction Overview – Issue and Subscription
Transaction Overview Issuer K-Electric Limited (“KE” or the “Company”) Instrument Sukuk, based on Shirkat ul Milk (a form of Musharaka) Issue Amount Upto PKR 6,000mn (inclusive of green shoe of PKR 500mn) Financial Advisor Habib Bank Limited (“HBL”) Purpose To fund the permanent working capital requ
Slide 28: Transaction Overview – Security and Ratings
Transaction Overview Security Exclusive hypothecation charge on grid stations of KE for upto PKR 8,000 million Listing Venue KSE, LSE and ISE Trustee /Inv. Agent Pak Brunei Investment Company Limited Registrar & Transfer THK Associates (Pvt.) Limited Agent Instrument Rating “A+” (A plus) for each Su
Slide 29: Transaction Overview – Sukuk Tranches
Transaction Overview Sukuk 1 Sukuk 2 Sukuk 3 Total Tenor 13 months 36 months 60 months PKR Million Amount 750 3,500 1,250 5,500 Green Shoe Amount Nil 250 250 500 Total Amount (incl. Green Shoe) 750 3,750 1,500 6,000 Profit Rate (Floating) 1-mth KIBOR* + 3-mth KIBOR 3-mth KIBOR + 1.00% +2.25% 2.75% P
Slide 30: We thank you for your continued trust and support
We thank you for your continued trust and support 30
Slide 31: Thank You
Thank You 31